Worries over sky-high prices
Worries over sky-high prices
AUG 19, 2018
It sounds like a rosy picture on the housing front: Housing Board resale prices have come down 11.8 per cent since their peak five years ago.
And it is also cheaper to live under that roof, compared with five years ago.
Accommodation and utilities are 9.7 per cent more affordable last year than in 2013, according to the consumer price index.
Accommodation, here, is calculated as the hypothetical rental the owner would pay if he were a tenant - in other words, the opportunity cost of him living there.
And yet, some do not share that view. For example, some Singaporeans, like counsellor L.T. Wong, 34, believe housing prices have risen so sharply as to be out of reach.
Ms Wong, who lives in a four-room HDB flat in Punggol with her husband and three-year-old son, says: "I hope we can move to a condo in a more central location by next year, but I worry if my son will be able to buy his own flat without our help."
One reason for the gap between perception and reality could be lifestyle choices, exacerbated by public hype over recent collective sales, say those in the real estate industry. As well, record-breaking HDB resale flats are more likely to stick in people's minds, even though they are anomalies.
"We are brought up in a very materialistic system where everything is priced in - once you attribute a price, everyone wants the best," says Savills Research senior director Alan Cheong.
One reason for the gap between perception and reality could be lifestyle choices, exacerbated by public hype over recent collective sales, say those in the real estate industry. As well, record-breaking HDB resale flats are more likely to stick in people's minds, even though they are anomalies.
"We are brought up in a very materialistic system where everything is priced in - once you attribute a price, everyone wants the best," says Savills Research senior director Alan Cheong.
Even prices for private non-landed homes, which comprise the bulk of private transactions, have come down 3.6 per cent since the peak in the third quarter of 2013.
A year ago, this decline was even greater. By the second quarter of last year, prices of such homes had come down by 13.5 per cent. But prices climbed 9.1 per cent in the last four quarters, in large part due to a revival of sentiment and the need to pass on rising land costs arising from collective sales to new buyers.
Another reason for the perception gap on the reality of housing and accommodation inflation - or rather, lack of - is that the price of utilities has seen back-to-back increases, creating an impression that housing costs have gone up overall.
Gas tariffs were increased by 3.78 per cent starting this month, the third time this year they have risen. Electricity tariffs for the third quarter will rise by an average of 6.9 per cent - the third consecutive hike this year - while the second phase of a water hike kicked in last month.
It was the first increase in the price of water in 17 years.
While households spend only 3.4 per cent of their incomes on utilities, such headlines exert pressure on many households, which deal with such bills on a monthly basis - as compared with mortgages which are, in a way, conducted "out of sight" through bank loans and CPF funds - and as such, they "feel the pinch more", says UOB economist Francis Tan.
In any case, he adds, most households will purchase only one flat at a time, making any comparison to prices five or 10 years ago moot.
"The absolute sum is what sticks and creates a sense of something being expensive," he says.
